The Story Behind Wage-Fixing in Hollywood

December 22, 2014

PandoDaily.com editor Mark Ames explains how he uncovered a wage-fixing conspiracy that began in the 1980s and led all the way to Hollywood executives with connections to the White House

PandoDaily.com editor Mark Ames explains how he uncovered a wage-fixing conspiracy that began in the 1980s and led all the way to Hollywood executives with connections to the White House



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Story Transcript

JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I’m Jessica Desvarieux in Baltimore.

Wage theft stories aren’t only happening at fast food companies like McDonald’s, but the computer animation industry is also being accused of fixing employee wages. Major players like Disney, Sony, and many more have been entangled in a conspiracy called Techtopus. And our next guest broke that story on how it all happened.

Joining us now is Mark Ames. He is the senior editor at PandoDaily, and he’s the author of several books.

Thanks for joining us, Mark.

MARK AMES, SENIOR EDITOR, PANDODAILY: Thanks for having me on.

DESVARIEUX: So, Mark, we know that the employees of these companies are suing these companies for wage theft and antitrust violations, essentially. And your story was a big reason for why they came forward. Can you just explain to us how you uncovered this story?

AMES: Right. So what we found out from a court hearing in November is that this new portion of the lawsuit, which involves major Hollywood studios conspiring to suppress the wages of their computer animation workers, they did come out of the reporting that we did at Pand, that I did this summer and throughout the year.

Basically, what we found is that there’s been a lawsuit going on for a couple of years now, and most people know it as the Silicon Valley wage theft lawsuit, and I did too, originally. This is where Google and Apple and Intel and a few other companies conspired together to essentially fix the wage market, fix their workers’ wages, by making sure they didn’t recruit from each other, which is really how wages rise. And they did this beginning especially in Silicon Valley in 2005. That’s when wages were starting to go up.

But as I pored through the documents more–the court dockets, the depositions, the emails, and so on–what I found was an incredible amount of collusion, much beyond Silicon Valley, and particularly in Hollywood animation industry. And it’s interesting, because this whole Techtopus, this whole wage theft conspiracy that involved, eventually, Apple and Google, it began in the mid 1980s as a secret agreement between Lucasfilm (George Lucas) and Ed Catmull and Steve Jobs at Pixar. And they agreed not to recruit each other’s workers, to essentially keep their workers’ wages down, in order to keep their operations profitableA.

And now what we know is that–initially what we knew is that this eventually spread to Silicon Valley and then well beyond by the mid 2000s. But what we’re finding about from this new lawsuit that is against Disney, against DreamWorks animation, which is headed by Jeffrey Katzenberg, a major bundler for the Obama campaign, Sony, Blue Sky entertainment, which is Blue Sky animation, which is Fox, which is Murdoch’s, what we know is that in the computer animation industry, the heads of HR departments, the top executives, appear, from all of the emails and the communications that we’re seeing, that were deposed by the Department of Justice a few years ago, they’ve been colluding since as far back as the mid 1990s. And so you have these emails by 2007 that were just recently released through discovery between the heads of the HR departments of DreamWorks, Disney, and so on, comparing notes, comparing wages, joking about how these HR departments of these allegedly competing companies communicate with each other every day on a daily basis. It’s obviously in violation of Antitrust Act, assuming all this goes through and pans out.

DESVARIEUX: So this evidence sounds pretty strong, ’cause, like you said, there are emails–they’re actually written documents–that could kind of make the case for why these employees should be compensated for this wage theft. I want to get a sense from you what the executives have to say about this. Has there been any response?

AMES: No, nothing. For the most part, they all say that they think they did the right thing under various circumstances. In the tech industry, they either have no response or they say we needed to do this for innovation so that Silicon Valley can innovate.

In the computer animation industry, it’s interesting. I got a lot of my information by reading depositions of Ed Catmull and George Lucas for the original lawsuit in Silicon Valley, and they’re kind of shockingly candid. And they say over and over, we had to basically fix wages in the computer animation industry, or else everything would collapse and all the jobs would be shipped off to China.

And the funny thing is, you know, to be fair, there is some truth to that. I mean, globalization has been awful for Hollywood animators, as it has been for many other workers.

But where that argument really falls flat is that Pixar sold out to Disney in–I believe it was 2006 or ’07, and that netted Steve Jobs something like seven and a half billion more dollars. Lucasfilm sold out to Disney in 2012, and that netted him about four and a half billion. And he didn’t go and turn around, neither of those guys or Catmull, they didn’t turn around and redistribute those billions of dollars that they made essentially by suppressing their workers’ wages. If they can claim, okay, we saved the industry, fine, but then you actually pocketed billions of dollars that you don’t not need. Why don’t you then redistribute it back to the workers whose wages were suppressed in order to make you a multi-gazillionaire?

DESVARIEUX: Mark, I want to get a sense of the labor relations in the cinema animation industry. Do they have a union? Were those union representatives not doing their job? What is sort of the dynamics there?

AMES: They have a guild. And I would say that they’re fighting–from my talks with them and so on, I think they’re fighting a very defensive battle, like a lot of unions have been, whereby they’ve been doing their best to try to stem–I mean, they’re not radicalized, at least not the official guild, by any means, and I think what they’ve been trying to do is stem the bleeding is much as possible. But they have not been able to sort of push it back at all. So it’s not like the Screen Actors Guild or Screenwriters Guild or where they seem to be more radical and have more leverage. It’s a small amount. It’s a small number.

And the reality is, these jobs are being shipped off. And guys like Katzenberg and the head of Disney and so on, they are very politically powerful, very politically connected. As we know, Katzenberg was–I think he was the number-one bundler for Obama in 2012. And what we know now–I raised this in the summertime, but now we know it from discovery and from the court hearings, we know that the Department of Justice under Obama did investigate DreamWorks and they did investigate Disney for this and Sony and Blue Sky animation. And they let them all off, essentially, except for Pixar and Lucasfilm, who were able to kind of settle out of sight.

But nobody would have even known. What’s incredible to me is no one would have known even about the depths of and the extent of this wage theft collusion in Hollywood if I hadn’t pored through these documents. And to me that’s a problem of tech journalism, such as it even exists. And I think at PandoDaily we’re trying to change that. But no one even took the time to pore through these things. And they’re shocking and they’re kind of a gold mine of material for journalists.

DESVARIEUX: Well, we’re happy you tapped into that gold mine, and we certainly want to get updates in the new year.

Mark Ames, thank you so much for joining us.

AMES: Thank you.

DESVARIEUX: And thank you for joining us on The Real News Network.

End

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